Q1. Turtle Co is a manufacturer of large luxury yachts for very wealthy individuals and governments. Turtle uses job-order costing to trace its costs to individual orders, each yacht having a separate job number. The company applies overhead using a predetermined overhead rate based on direct labor hours. The following information applies to 1997.

1. Calculate Turtle’s predetermined overhead rate for 1997.
2. Compute the total manufacturing costs applied to Job 1.
3. Calculate the total over- or under-applied overhead for the company for the year of 1997.

Q2. On March 1, 1997, the Brewers Company , which produces metal baseball bats for Little League baseball teams, had 7,000 unfinished bats in process. Each one was 25% complete as to conversion (i.e., direct labor and manufacturing overhead). Total costs were:

Direct materials $10,400

Direct Labor $5,000

Manufacturing Overhead $1,600

During March 23,000 bats were started ; at the end of March there were 5,000 bats remaining in work-in-process, 60% complete as to conversion. The costs incurred in March were $34,600 for direct materials, $80,000 for direct labor, and $26,400 for manufacturing overhead. The direct materials are added at the beginning of the production process, and conversion costs are incurred uniformly throughout the process. The weighted average method is being used by the company to account for the production process.

1. Compute the number of the equivalent units for direct materials and conversion.
2. Compute the cost per equivalent unit of direct material and conversion
3. Compute the cost remaining in work -in-process inventory on March 31.

Q3. The controller for Badger Corporation has established the following activity cost pools and cost drivers.

1. Compute the manufacturing overhead rate for each activity cost pool.
2. An order for 1,000 boxes of Product A has the following production requirements:

Machine setups 4 setups

Inspections 10 inspections

Machine hours 500 hours

Compute the total overhead that should be assigned to Product A order.

Q4. You are reviewing the financial statements of three companies in the same industry. Specifically , you are interested in the transactions surrounding plant assets during the past year. The following information is available for the three companies. Compute the unknowns.

Q5. Cabell Company manufactures two products , Product C and Product D. the company estimated it would incur $99,590 in manufacturing overhead costs during the current period. Overhead currently is assigned to the products on the basis of direct labor hours. Data concerning the current period’s operations appear below:

Required:

1. compute the predetermined overhead rate under the current method and determine the unit product cost of each product for the current year.
2. The company is considering using an ABC system based on DLHs. The ABC system would use three activity centers. Data relating to these activities for the current period are given below:

1. Newman Company reported insurance expense for the year ended Dec. 31, 19X7, of $37,490. During the same period, the prepaid insurance account decreased $4,610. The payments for insurance during the year ended Dec. 31 , 19X7, were:

1. $37,490
2. $46,710
3. $42,100
4. $32,880

1. On January 1, 19X4, prepaid insurance had a balance of $6,700 and on Dec. 31, 19X4, a balance of $8,320. The income statement of the year reported insurance expense of $49,310. Payments for insurance during the year amounted to:

1. $49,310
2. 47,690
3. 57,630
4. 50,930

1. Liberty Industries prepares its statement of cash flows using the direct method. Liberty sold equipment with a book value of $8,000 at a gain of $2,500. The amount to be reported on the statement of cash flows under the operating activities is:

1. ($2,500)
2. 2,500
3. 0
4. cannot be determined from the information given

1. Which of the following would never appear on a direct method statement of cash flows?

1. cash payments for operating expenses
2. cash purchases of inventory
3. cash receipt from repayment of loan
4. amortization expense

Question 5-9 refer to the following

Four cost classifications choices are provided for each question below. Select the classification from the four provided that best fits the cost described in the question.

Mark and Janet are engineers who have designed a telecommunications device that their present employer is not interested in manufacturing . While the device does not fit their employer's present product strategy, Mark and Janet are convinced that there is a big potential market for the device. Accordingly, they have decided to leave their jobs and to start a company to manufacture and market the device.

1. Salary of $2,000 per month that each presently earns at Electronics Company is a (an):

1. variable costs
2. fixed cost
3. product cost
4. opportunity cost

1. Cost of a machine which they purchased two years ago to make experimental boards. They will use the machine in the manufacture of the new board.

1. opportunity cost
2. sunk cost
3. differential cost
4. period cost

1. Raw materials that will be used in manufacturing the computer board are a :

1. sunk cost
2. fixed cost
3. period cost
4. variable cost

1. Rent on the administrative office space is a (an):

1. variable cost
2. opportunity cost
3. period cost
4. product cost

1. real estate property taxes on a building that will be purchased to house the manufacturing facility are a (an):

1. product cost
2. variable cost
3. opportunity cost
4. period cost

1. Gabat Inc. is a merchandising company. Last month the company's merchandise purchases totaled $67,000. The company's beginning merchandise inventory was $19,000 and its ending merchandise inventory was $22,000. What was the company's cost of good sold for the month ?

1. $108,000
2. 67,000
3. 64,000
4. 70,000

Q11 and Q12 refer to below:

Parker Company has a job order cost system and uses a predetermined overhead rate based on DLHs to apply manufacturing overhead to jobs. At the beginning of the year, manufacturing overhead and DLHs for the year were estimated at $50,000 and 20,000 hrs, respectively. In June, Job #461 was completed. Materials costs on the job totaled $4,000and labor costs totaled $1,500 at $5 per hour. At the end of the year it was determined that the company worked 24,000 direct labor hours for the year and incurred $54,000 in actual MOH costs.

1. If Job #461 contained 100 units, the unit cost on the completed job cost sheet would be:

1. $61.75
2. 62.5
3. 63.1
4. 55

1. The MOH fo the year was:

1. $6,000 overapplied
2. 10,000 overapplied
3. 10,000 underapplied
4. $4,000 underappplied

Questions 13-16 refer to below:

the accounting records of Omar company contained the following information for last year:

*Does not include over- or underapplied overhead.

13. the amount of DM purchased during the year was:

1. $66,000
2. 70,000
3. 65,000
4. 74,000

14. the total costs added to WIP during the year were:

1. $206,000
2. 162,000
3. 176,000
4. 182,000

14. If Omar Company applies overhead to jobs on the basis of direct labor hrs and Job 4 took 120 hrs, how much overhead should be applied to that job?

1. $960
2. 360
3. 528
4. 288

14. The cost of goods manufactured for the tear was:

1. $190,000
2. 162,000
3. 168,000
4. 135,000

Q17-19 refer to below:

Farber company uses a job order cost system. The information below is from the financial records of the company for last year:

Applied OH was 30% of total manufacturing costs. The WIP inventory at Jan. 1 was 75% of WIP inventory at Dec.31.

14. Farber Company’s total direct labor cost was:

1. $750,000
2. 600,000
3. 900,000
4. 937,000

14. Total cost of direct material used by Farber Company was:

1. 750,000
2. 812,500
3. 850,000
4. 1,150,000

14. the WIP inventory at Dec.31 was:

1. $300,000
2. 225,000
3. 100,000
4. 75,000

14. Which of the following types of firms typically would use process costing rather than job-order costing?

1. A small appliance repair shop
2. A manufacturer of commercial passenger aircraft
3. A specialty equipment manufacturer
4. A breakfast cereal manufacturer

14. Avery Co. uses a predetermined OH rate based on DLHs to apply manufacturing OH to jobs. For the month of OCT., Avery’s estimated manufacturing OH cost was $300,000 based on estimated activity level of 100,000DLHs. Actual OH amounted to $325,000 with actual DLHs totaling 110,000 for the month. How much was the overapplied or underapplied OH?

1. $25,000 overappplied
2. 25,000 underapplied
3. 5,000 overapplied
4. 5,000 underapplied

14. All of the following are correct in describing process costing except:

1. Equivalent units(E.U.) refers to the equivalent , in terms of completed units, of partially completed units.
2. The weighted –average method is the method of accounting for cost flow in which E.Us and unit costs relate only to work done during the current period.
3. Sequential processing is a method of arranging processing departments in which all units go through all departments.
4. The transferred –in cost is the amount of cost attached to units of product that have been received from a prior processing department.

Q23.to 25 refer to the following:

Jumper Company uses the weighted –average method in its process costing system. The following data pertain to operations in the first processing department for a recent month:

14. how many units were in the ending WIP inventory?

1. 600 units
2. 1,000 units
3. 800 units
4. 1,400 units

14. What was the cost per E.U of production for conversion cost during the month?

1. $5.00
2. 12.3
3. 8.5
4. 14.75

14. How much cost , in total, was transferred to the next dept during the month?

1. $315,000
2. 306,000
3. 312,000
4. 317,000

Q26 –27 refer tot the following:

Bronson Company has a process costing system and uses the weighted –average method. The company had 6,000 units in WIP on Jan. 1 which were 60% complete w.r.t conversion costs. During Jan 20,000 units were completed. On Jan 31, 8,000 units remained in WIP which were 40% complete w.r.t conversion costs. Materials are added at the beginning of the process.

14. The E.U. of production for Jan. for conversion costs were:

1. 19,600
2. 22,400
3. 23,200
4. 25,600

14. How many units were started into production during Jan?

1. 18,000
2. 19,600
3. 20,000
4. 22,000

1. Job order costing; pls make sure you know to deal with the clearing of underapplied and overapplied overhead, and the costs flows entries in your HWs.
2. revise your HWs ( come in LG02 if you want to check answer)